The Board reviews and updates the Group’s strategy annually. The Chief Executive and Executive Committee agree the Group’s strategic objectives, business portfolio actions and integrated business plans. The strategy is also supported by ten short-term objectives agreed annually by the Chief Executive and Executive Committee which address the key challenges in delivering the strategy in the year ahead. Performance against these objectives is measured using a number of key performance indicators which are regularly reported to the Board. Achievements against the 2008 objectives are summarised below.
| Objective |
 |
2008 performance |
| 1. Meet 2008 financial targets |
|
Another year of strong performance, with 2008 financial targets for earnings per share and net cash/debt exceeded. |
| 2. Develop our partnering approach |
|
Further good progress in partnering with customers in the Group’s home markets. The acquisition of Tenix Defence in June addresses opportunities to develop through-life business in partnership with the Australian armed forces. |
| 3. Ensure continued application of business policies and processes |
|
Key business policies and processes are mandated across the Group, and are an important part of the integration of newly acquired businesses. These policies and processes continued to be refined and enhanced with a focus on achieving good, consistent application across all businesses. |
| 4. Further enhance programme execution through schedule and cost performance |
|
Good programme execution has again been reflected in the performance of the Group. The Group exceeded its 2008 targets for programme margin improvement and schedule adherence. |
| 5. Progress development of security business |
|
The acquisition of Detica in September built on the Group’s established position addressing Homeland Security markets in the US and accelerated the implementation of the Group’s strategy to address growth opportunities in national security business across its home markets. |
| 6. Grow our US business, including through investments |
|
The Group continued to grow its US businesses, with the prior year acquisition of Armor Holdings and strong organic growth from its US land systems business. The acquisition of MTC Technologies in June addresses further growth opportunities in readiness and sustainment activity in the US. |
| 7. Progress the business in the Kingdom of Saudi Arabia |
|
The Group continued to develop its presence in Saudi Arabia and remains committed to its strategy of developing a greater indigenous capability in the Kingdom. Good progress was made in establishing industrial capabilities to support the modernisation of the Saudi armed forces as part of the Saudi-British Defence Co-operation Agreement. |
| 8. Continue to implement the UK Defence Industrial Strategy (DIS) |
|
BAE Systems continued to make progress in supporting the UK armed forces through long-term partnering agreements. The formation of the BVT joint venture in July was a key step in the consolidation of the UK naval sector consistent with the objectives of the DIS. |
| 9. Progress export opportunities |
|
Export opportunities continued to be addressed. The Group’s increasing emphasis is on deriving growth in its business by the establishment of industrial capability in defined markets. |
| 10. Continue to drive performance in safety, ethics and diversity |
|
Good progress was made in embedding the Group’s commitment to safety, ethics and diversity. The publication of the Woolf Committee report in May was followed by the establishment of a programme of actions to implement its recommendations. A Group-wide Code of Conduct was developed for roll-out at the start of 2009. |